Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Investing well amongst global turbulence

As hopes of a trade deal between China and the US are fading, Milford Asset Management Investment Analyst Stephanie Perrin says there’s no sign yet we’ve reached a tipping point for the big tech stocks. They may not be immune to the turbulence, but they remain strong.

“If there was a significant downturn or recession, there would be very few companies that would be immune and that includes the big tech stocks. But what we’re actually seeing is a gradual slow-down, and these technology companies are continuing to execute very well, while maintaining robust balance sheets which makes them more resilient. There are some companies that are more exposed to the trade war than others, for example Apple and some of the hardware manufacturers that have supply chains in China – but there are others, like Facebook, Google, some of the software names, that have very little exposure in China and are holding up well.”

On the other hand US banks stocks, like Bank of America and Morgan Stanley have taken a hit. Every banking wobble rekindles fears of a new global financial crisis – but Stephanie Perrin says we’re not on the brink of a new global slump.

“Bank stocks have pulled back on concerns around the economic slow-down and, more importantly, falling 10-year yields that pressure banks’ net interest margin – the difference between what they pay on deposits versus what they charge on loans. But we did see in the recent quarterly earnings that they’re achieving modest loan growth, solid credit quality and there’s been consistent commentary around the ‘healthy’ US consumer. There’s also the potential for a re-acceleration of growth on the back of lower interest rates. And it’s very important to note that US banks are in a very different situation now versus prior to the GFC: they’ve de-risked their balance sheets, are well capitalised and stress tests have shown that they can withstand an economic shock.”

So, in the face of economic volatility here and around the globe, how is Milford positioning its funds?

“There’s still a very wide range of outcomes for the trade war and as such, we’re not trying to position the funds in a way that we would be betting on one outcome or the other. Our global investments are focused on companies that have sustainable earnings growth and are tapped into secular trends that will continue regardless of what happens in the trade war. Companies that are more domestic-focused, have held up better than others. And we have shifted to slightly more defensive names in our portfolio. We do expect that increased volatility will continue, which creates a great stock-picking environment where we can be opportunistic.”

If you’d like to view Stephanie Perrin’s interview discussing these and related issues you can click here.


© Scoop Media

Business Headlines | Sci-Tech Headlines


NIWA: Scientists Say Methane Emitted By Humans ‘vastly Underestimated’

NIWA researchers have helped unlock information trapped in ancient air samples from Greenland and Antarctica that shows the amount of methane humans are emitting into the atmosphere from fossil fuels has been vastly underestimated... More>>


SMC Expert Reaction: Record Dry Spells And Effects On Forests

With no rain forecast before Sunday, Auckland is about to break a record for the city's longest dry spell. Niwa says Auckland is likely to hit 40 consecutive days without rain this weekend . The upper North Island is seeing severe meterological ... More>>


Reserve Bank: Official Cash Rate Remains At 1.0 Percent

The Monetary Policy Committee has decided to keep the Official Cash Rate (OCR) at 1.0 percent. Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2 percent mid-point of our target range. ... More>>


Science Media Centre: Novel Coronavirus Detected In China – Expert Reaction

The virus was detected after more than 40 people were hospitalised with pneumonia in Wuhan City, China and the outbreak traced to a large animal and seafood market. The Centers for Disease Control and Prevention reports that person-to-person transmission ... More>>


Science Media Centre: Flooding could release toxic gas – Expert Reaction

A chemical substance known as ouvea premix stored at an old paper mill in Mataura could release toxic ammonia gas if it comes in contact with water.More>>